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AG Nessel Joins Coalition of 21 States in Fight to Protect Retirement Savings of Employees

LANSING — Michigan Attorney General Dana Nessel joined a multistate coalition in fighting back against a legislative effort to overturn a federal rule that helps protect the retirement savings of hard-working American employees. The rule, issued by the U.S. Department of Labor (DOL), clarifies that fiduciaries of private-sector employee retirement plans, such as 401(k) plans, can consider environmental, social, and governance (ESG) factors when making investment decisions. In the letter issued to members of the U.S. Congress, AG Nessel and the 20 attorneys general asserted that the DOL rule helps fiduciaries make investment decisions that better address the long-term investment horizons of the employees they represent by allowing them to consider ESG factors, particularly the costs and impacts of climate change.

Overturning the Department of Labor's rule allowing administrators of 401(k) plans to consider ESG factors in making investments would leave the retirement funds that millions of workers rely on for their long-term financial well-being at risk for huge losses,” Nessel said. “Those in charge of these funds need to assess the whole nature of the businesses in the fund, as well as how that business is affected by external market realities. Just as I supported the SEC’s Proposed Rule to require businesses to disclose their climate-related risk, I support my colleagues in asking the Department of Labor to retain its ESG rule which, when applied, provides important information for identifying financial risks.”

For many people who work in the private sector, employee benefit plans, such as 401(k)s, make up the bulk of their retirement savings. The consideration of ESG factors, like many other factors, can make a significant difference in the value of their savings and, ultimately, on the financial security of employees once they retire.

For example, rising temperatures and more frequent and severe weather events are already damaging infrastructure, disrupting businesses, and threatening public health in the United States and around the globe. In the past five years alone, extreme weather events caused or exacerbated by climate change, such as hurricanes, wildfires, extreme heat, and extreme drought, have cost U.S. companies nearly $600 billion — a figure that is only expected to rise. This has impacted a wide range of industries, including ones that fiduciaries might consider investing in.

After the DOL rule was issued in December 2022, two members of the U.S. Congress introduced a joint resolution in an attempt to overturn the rule. In their letter, the 21 attorneys general pushed back against the joint resolution, asserting that:

  • The Final Rule’s recognition of the potential relevance of ESG factors to investment evaluations is supported by strong data;
  • During the 60-day public comment period before the rule was finalized, more than 97% of stakeholders supported the DOL proposal that became the Final Rule; and
  • Opposition to the rule is part of a yearslong campaign to obscure the truth that ESG factors, including the impact of climate change, the benefits of diverse workforces, and the need for cybersecurity protections, affect businesses’ bottom lines.

The letter was sent to Senators Bernie Sanders and Bill Cassidy, chair and ranking member, respectively, of the Senate Health, Education, Labor, and Pension Committee, and Representatives Virginia Foxx and Bobby Scott, chair and ranking member, respectively, of the House Education and the Workforce Committee.

In submitting the letter, AG Nessel was joined by the attorneys general of Arizona, California, Connecticut, Delaware, District of Columbia, Illinois, Maine, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, and Washington.

A copy of the letter can be found here.

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